* Offer is discount of 8.3% to 9.5% to Tuesday's closing price

* AMMB shares have climbed 4.7% year-to-date

* Sale will reduce ANZ's stake in AMMB to 12.7% from 21.7%

(Adds share performance in paragraph 3, AMMB's response in paragraph 8)

SYDNEY/SINGAPORE, March 5 (Reuters) - Australia's fourth-biggest bank ANZ Group is selling around 298 million shares or 9% stake worth up to $242 million in Malaysian lender AMMB Holdings or AmBank, according to a term sheet seen by Reuters on Tuesday.

The shares are being offered at between 3.80 ringgit and 3.85 ringgit per AMMB share, according to the sheet, which is equivalent to a discount of 8.3% to 9.5% to the closing price of AMMB's shares of 4.20 ringgit on Tuesday.

Shares of AMMB have climbed 4.7% year to date, LSEG data showed.

The sale will reduce ANZ's stake in the Malaysian bank to 12.7% from 21.7%, according to the sheet.

The sale comes three years after ANZ announced it would write down the value of its investment in AMMB after the Malaysian bank settled a claim linked to the massive financial scandal at state fund 1MDB.

AMMB announced in early 2021 that it would pay the Malaysian government 2.83 billion ringgit ($597.93 million) to settle claims in relation to its role in the scandal in which $4.5 billion was allegedly stolen from 1Malaysia Development Berhad (1MDB), a state fund set up by former prime minister Najib Razak.

AMMB is the sixth-largest banking group by assets in Malaysia, according to its website. ANZ in the past had tried to sell its stake in AMMB.

"This is a shareholder matter and they are following through with what they have announced in the past," an AMMB spokesperson said in an emailed response to a Reuters' query. "It is business as usual for AMMB Group."

ANZ did not immediately respond after working hours on Tuesday.

The joint placement agents for the sale are BofA Securities and CIMB, the sheet showed.

($1 = 4.7330 ringgit) (Reporting by Scott Murdoch in Sydney and Yantoultra Ngui in Singapore, Editing by Louise Heavens)